By Ajay Bhalla, President of Global Enterprise Risk and Security, Mastercard
As consumers become more aware — and less tolerant —of payment fraud, more needs to be done to win their trust in digital transactions.
With the rise in autonomous vehicles, Quantum computing, biometrics and Artificial Intelligence– we’re undeniably in the age of digital innovation. New, dynamic, life changing technology is unveiled with every passing month, with the potential to revolutionize how consumers, society and economies operate. However, without trust – these innovations can never truly be embraced in their entirety, limiting their potential to enhance people’s lives.
The idea of trust has been important throughout history. It’s the backbone of every service and operation – and this is especially the case when it comes to payments. But, in the age of technology where the value and importance of identity and privacy has never been higher, how can trust be established or maintained?
Trust is rooted in relationships and this is the same for digital. The guarantors of digital trust form one axis: Institutions, businesses, individuals and governments that are responsible for creating and fostering a trustworthy digital environment and experience. The givers of trust represent the other side of this relationship: the consumers, who through their behavior and attitudes, reflect and reveal their preferences and sentiments.
Trust and the payments industry
Trust is key to the success of all commerce and how it is delivered through payment technologies. Consumers need to believe their money, identity and privacy are safe before using digital payments.
Most of us do have faith in what we know, but millennials – those aged between 22 and 39 — are less tolerant of fraud incidents than previous generations; a survey from US credit agency FICO published in June 2016 found 22 percent of US consumers will close an account after a fraud incident, while 29 percent of millennials will close all accounts with that issuer if they feel it wasn’t handled properly.
The way the modern consumers interacts with smartphones, together with the immediacy of social media, means they won’t stand for inaction from issuers or merchants. Social media has taught them that everything can happen in an instant. There is no point in writing a letter of complaint to someone; Tweet them and they will respond quicker. Not only does this emphasize the degree of trust they have in technology, it also highlights an oblivious nature to what they openly share online.
In fact, FICO found that 14 percent of US consumers had written a negative social media post about a fraud incident — a 100 percent rise year-on-year, creating a misleadingly negative impression of payment security.
People are almost assuming these things will happen securely, with no need for them to take any action to protect themselves. But, while payments have never been safer, criminals have never been smarter – and the noise from media never louder.
The “noise” is constant. Only last week, there was a new identity scandal where 144 million identities were compromised. The fundamental challenge is to prevent a loss of consumer confidence in digital payments, otherwise its adoption could stall. As technologies and providers proliferate, consumers will be forced to make choices on who they trust.
Social media has enabled us to evaluate trust via a star rating and reviews, but where money or identity are at stake consumers need to adopt more rigor in who and what they trust. Whether you’re paying rent, or helping you’re child put a down payment on their first property – the knowledge that you’re money gets to the right person securely is paramount.
When firms are assessing an approach they must first and foremost try to prevent attacks getting through. Companies need to accept that no matter how good their prevention techniques are, they will be hacked and so must also be able to detect breaches quickly and efﬁciently, before isolating and resolving them. For payments, a key part of the security approach is knowing you are transacting with the right person. Proving your identity is becoming a vital tool in the Cyber security space.
It is vital to build a digital payment system that works in-store or online and is trusted by consumers, merchants and issuers. Using technology to make better, more intelligent decisions is a key part of that. To that end, we must lead the drive to replace passwords and enable the use of biometrics, as well as reinforcing EMV adoption globally. And while this remains work in progress we are already well advanced with the next level of digital technology development to address the rapidly changing digital landscape.